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Saturday, Dec 14, 2002

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Economic growth versus social impact

P. Devarajan

IN a rare chat on the social fall out of globalisation in the sanctum sanctorum of the Indian financial system, Prof Jagdish Bhagwati, who teaches at the Columbia University, favoured a small surcharge (four per cent) on Indian NRIs to compensate the country the cost of breeding the brains.

Accepting the proposition that brain drain cannot be stopped or for that matter should not be stopped, the amiable professor thought the levy could cover NRIs who still hold Indian residentship.

That could start a peal of protest apart from NRIs seeking permanent residency in US or Europe to duck the levy. In some ways the large number of Indians, for instance in US, could be placing pressure (for the better) on the American way of looking at India.

Also the brain bleed can be traced to the state-mandated reservation policies for certain sections of the public. Further, Indian brains in the US ill-fit the rather outdated Indian business or scientific apparatus. Lastly, does the movement of unskilled labour into the Gulf, which enhances forex reserves without improving the quality of the Indian citizens in Gulf, suggest absence of work in India?

In the interaction Prof Bhagwati had with select journalists, moderated by the RBI Governor, Dr Bimal Jalan, at the RBI Towers on Friday, the focus was on the impact of globalisation on poverty, gender issues and indigenous cultures. At the end, one was not sure whether for India fast economic growth should take precedence over social impact. If poverty has to go, India has to become an economic power; as for the social consequences, gender issue, dying away of local life styles and all the rest have been with the country much before US and its multinational firms thought of advocating their model.

Globalisation as spelt out by the US is akin to monoculture explaining the bristling protests in India and other developing countries. For Prof Bhagwati, the important question is whether globalisation has worsened society or not. It is debatable if globalisation has sustained economic growth in India since the 1990s. The initial freeing of economic activity from Government thraldom since the 1990s could explain better the Indian economic scene.

In a paper, `A Stream of Windows', Prof Bhagwati admits, "Of course, the most difficult policy act for a free trader is to be also a free immigrationist." India has been absorbing quite regularly Bangladeshis and Tamils from Sri Lanka, apart from the first flow of Tibetans under Dalai Lama, despite the low carrying capacity of the economy. The distinguished professor has taken a public stance "that legislation must err on the side of a relaxed attitude toward immigrants, whether legal, illegal or refugees" and has argued for a World Migration Organization "to complete the international superstructure of governance."

Free trade implies free movement of everything including humans. At present, world economies have been practicing a US version of free trade that protects US business first and last. The only option left for India, Africa and Latin America to combat US supremacy, is speedy growth. If US fears any one economy, it is the perceived economic strength of China, however, controversial be its political apparatus.

India has to work from within the WTO and others and will be heard only if the economy grows at well over 10 per cent per annum. Only then will US realise it is not the last word on globalisation.

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